There have been various tax implications for the Non-Resident Indians (NRIs) willing to sell property in India. The applicability of taxes on the sale of property in India by NRIs may vary from the present status of their residence and the ownership of the property. According to the prescribed guidelines by the Income Tax Department, there is no tax on the inheritance of property in India as of now.

The sale of property or a real estate asset by NRI attracts short-term capital gains (STCG) or long-term capital gains tax (LTCG), TDS and applicable cess and surcharge if any. Individuals are mandated to pay taxes on the sale of inherited property or the real estate asset based in India irrespective of their residence status, be it a resident Indian or an NRI.

In order to assess the correct income tax liability on the sale of the property, a person is required to calculate the distinguish the gains as long-term or short-term. As per the present rules, a real estate asset held for over two years is classified as a long-term capital asset, while, any duration less than two years is considered as short-term.

To derive the long-term capital gains, a person has to subtract the cost of acquisition from the selling price after adjusting the indexation benefits. As of now, long-term capital gains are taxed at a rate of 20 per cent, whereas, the short-term capital gains are taxed according to the respective income tax slabs for NRI plus applicable education cess and surcharge. The STCG tax for NRI will be calculated on the basis of total taxable income for NRI in India.

On the sale of property by NRI in India, TDS is also applicable at a rate of 20 per cent if the property is sold after two years and at 30 per cent if the property is sold before two years.